Power Equipment Industry Weekly Tracker: Lithium Price Linkage Accelerates; Space PV Offers Significant Long-Term Upside

Date: January 5, 2026
Analyst: Dongwu Securities Research Institute
Rating: Overweight (Maintained)

Executive Summary

The Power Equipment sector (SW Index 10088) declined by 2.18% during the week of December 29, 2025, to January 2, 2026, underperforming the broader market. While Wind Power (+0.97%) and New Energy Vehicles (+0.59%) showed resilience, Photovoltaics (-4.29%) and Lithium Batteries (-2.83%) faced pressure. However, beneath the surface volatility, fundamental inflection points are emerging across key sub-sectors.

Key Investment Thesis:
1. Energy Storage & Lithium: The industry is experiencing a "strong off-season." Domestic capacity compensation mechanisms (Hubei, Gansu, Yunnan) are solidifying the business model for independent storage, driving expected global storage installations to grow by >60% in 2026. Lithium carbonate prices are rising rapidly, signaling a supply-demand reversal. We anticipate robust profit recovery for material leaders in Q4 2025 and throughout 2026.
2. Humanoid Robots: The sector is entering its "Year 1" of mass production (2025-2026). With Tesla’s Gen3 robot expected in Q1 2026 and domestic players like Unitree and OpenAI accelerating commercialization, we view this as a pivotal moment akin to the EV industry in 2014. We strongly recommend suppliers within the Tesla chain and core component manufacturers (actuators, sensors, screws).
3. Photovoltaics (PV): Policy-driven "anti-involution" measures are taking effect. Leading silicon wafer manufacturers have jointly raised quotes by ~12%, and silicon prices are stabilizing above RMB 65/kg. While near-term demand is weak due to seasonality, the supply-side discipline is improving profitability expectations for 2026.
4. Grid & Industrial Control: Grid investment remains robust, with 2025 cumulative investment up 5.9%. The focus is shifting towards UHV construction and overseas transformer exports. Industrial automation is showing signs of weak recovery, with PMI returning to expansion territory (50.1%).

We maintain an Overweight rating on the sector, prioritizing leaders in energy storage integration, lithium batteries, humanoid robot supply chains, and grid equipment with strong overseas exposure.

Key Takeaways

1. Energy Storage: Policy Support Drives Structural Growth

• Domestic Policy Breakthroughs:
  • Hubei Province: Introduced a capacity compensation mechanism for independent storage at RMB 165/kW/year, borne by industrial and commercial users. This applies to electrochemical storage (<240 cycles/year) and compressed air storage (<180 cycles/year), with 20% of capacity fees recovered annually.
  • Gansu Province: Established a reliable capacity compensation mechanism at RMB 330/kW/year for generation-side units that provide stable power during peak periods.
  • Yunnan Province: Released a 2025-2027 action plan targeting 8GW of installed storage by 2027, with 45 projects totaling >20GWh currently in progress. The policy explicitly supports grid-forming storage technologies.
• Global Demand Surge:
  • US Market: Large-scale storage installations in November 2025 reached 1,009MW (+82% YoY). Cumulative installations for Jan-Nov 2025 hit 11.7GW (+41% YoY). Driven by AI data center demand and the "Big and Beautiful" Act incentives, we forecast US large-scale storage to grow >60% in 2025 and reach 80GWh in 2026 (+51% YoY).
  • Europe & Emerging Markets: European household storage inventory destocking is complete, with shipments recovering. Germany’s large-scale storage installations grew 50% YoY in Nov 2025. Australia and the UK are also seeing record-high grid connections.
• Technology Milestone: China’s first 200MW/400MWh semi-solid state high-voltage cascade + sodium-ion hybrid storage station was connected to the grid in Guangdong, marking a significant step in diverse technology adoption.

2. Lithium Batteries & EVs: Price Reversal and Solid-State Progress

• Lithium Price Dynamics:
  • Carbonate Lithium: Prices are rising rapidly. Battery-grade lithium carbonate (SMM) reached RMB 118,500/ton (+0.4% WoW), while mainstream manufacturer prices hit RMB 120,000/ton. Futures prices touched RMB 124,800/ton.
  • Supply-Demand Reversal: Five major LFP producers have initiated maintenance cuts. With EV sales remaining resilient and storage demand exploding, battery utilization rates remain high. We expect Q1 2026 production to decline only by single digits sequentially, defying typical seasonal trends.
  • Material Pricing: Negotiations for 2026 long-term contracts are underway. We anticipate LiPF6 long-term prices near RMB 150,000/ton, LFP processing fees to rise by RMB 1,000/ton, separator prices to increase by 10%, and copper foil processing fees to rise by RMB 2,000-3,000/ton.
• EV Sales Performance (December 2025):
  • Total Market: 16 major domestic车企 reported combined sales of 1.185 million units (+1% YoY, -11% MoM). Full-year 2025 sales reached 12.05 million units (+29% YoY).
  • BYD: Sold 420,000 units (-18% YoY, -12% MoM); overseas sales exceeded 130,000 units.
  • New Forces: Huawei HarmonyOS Intelligent Driving sold 90,000 units (+81% YoY); NIO sold 48,000 units (+55% YoY); Li Auto sold 44,000 units; XPeng sold 38,000 units.
  • Policy Outlook: The 2026 national subsidy scheme is confirmed, linking subsidies to vehicle price ratios. Commercial vehicle subsidies remain unchanged, which is better than expected.
• Solid-State Battery (SSB) Acceleration:
  • BYD, Gotion High-Tech, and FAW have下线 (rolled off the line) 60Ah automotive-grade SSB cells with energy densities of 350-400 Wh/kg.
  • The industry is entering a critical pilot line phase in H2 2025-H1 2026. We favor suppliers of sulfide solid electrolytes, lithium sulfide, and core manufacturing equipment.

3. Humanoid Robots: The "0-to-1" Inflection Point

• Market Catalysts:
  • Tesla: Gen3 robot launch expected in Q1 2026. Mass production target of 1 million units by 2030 remains intact.
  • Domestic Progress: Unitree opened its first offline store in Beijing. OpenAI launched its first embodied AI robot. Peng Zhihui ("Zhihui Jun") unveiled the "Qiyuan Q1," a portable personal robot.
• Investment Logic: The sector is currently valued based on a hypothetical 1 million unit volume, implying a modest 10-15x P/E for the robot-specific business. Given the long-term potential of >100 million units, the upside is substantial. We are in the early "0-to-1" phase, similar to EVs in 2014.
• Core Components: Focus on deterministic suppliers in the Tesla chain and leaders in actuators, harmonic reducers, ball screws,灵巧手 (dexterous hands), and sensors.

4. Photovoltaics: Supply-Side Discipline Improves Margins

• Price Increases:
  • Silicon Wafers: Four leading manufacturers jointly raised quotes by ~12%. N-type 210R wafers quoted at RMB 1.50/piece (+20% WoW); N-type 210 at RMB 1.70/piece (+13.3% WoW).
  • Cells & Modules: Topcon 182mm cell prices rose to RMB 0.36/W (+20% WoW). Module prices increased by RMB 0.02-0.04/W to pass through higher silver and material costs.
  • Polysilicon: Quotes have stabilized above RMB 65/kg, though actual transaction volumes remain low as downstream buyers digest the hikes.
• Regulatory Stance: The State Administration for Market Regulation has strictly prohibited price-fixing and fraud, but industry self-discipline to curb "involution" (destructive competition) is gaining traction.
• Outlook: While Q1 2026 demand may be weak seasonally, the supply-side contraction and price stabilization will improve profitability for leading integrated firms and inverter manufacturers.

5. Wind Power & Grid: Steady Growth and Overseas Expansion

• Wind Tendering: December 2025 tenders totaled 11.49GW (+73% YoY). Full-year 2025 tenders reached 128.34GW (+19% YoY), with offshore wind contributing 11.6GW. Average bidding prices for onshore wind (with tower) remained stable at ~RMB 2,094/kW.
• Grid Investment: 2025 cumulative grid investment reached RMB 560.4 billion (+5.9% YoY). We forecast 2026 investment to exceed RMB 700 billion (+5-10% YoY).
• Key Projects: Construction began on the Yu-Qian, Xiang-Yue, and Min-Gan back-to-back HVDC projects. The world’s largest standalone grid-forming hybrid storage station (300MW/1200MWh) commenced operation in Ordos.

Sector Performance & Valuation

Market Performance (Week of Dec 29 - Jan 2)

Top Movers

• Gainers: Zhongchao Holding, Wanxiang Qianchao, ST Lingda, Maxwell Technologies, Tianqi Shares.
• Losers: Huaguang Shares, Tianlong Optoelectronics, Zhongneng Electric, Hezong Technology, Chuangyuan Technology.

Valuation Snapshot (Key Recommendations)

Note: EPS and PE estimates are based on Dongwu Securities forecasts.

(For a comprehensive list of valuations, please refer to Table 1 in the Appendix)

Detailed Industry Analysis

1. Energy Storage: The New Growth Engine

The energy storage sector is transitioning from policy-driven to market-driven growth, supported by newly established capacity compensation mechanisms.

• United States: The market is booming. November 2025 saw 1,009MW of new large-scale storage installations. The cumulative installation for 2025 is on track to exceed previous records. The driver is twofold: regulatory incentives (IRA extensions) and the surging power demand from AI data centers. We estimate that data centers will contribute 37GWh to the 2026 US storage demand. Despite potential tariff hurdles, Chinese supply chains remain competitive due to limited local cell manufacturing capacity in North America.
• Europe: After a period of inventory correction, household storage shipments are recovering. Germany’s large-scale storage segment is growing rapidly (+50% YoY in Nov). The UK and Australia are also witnessing strong grid-connection rates, driven by renewable integration needs.
• China: The implementation of capacity compensation in Hubei (RMB 165/kW/yr) and Gansu (RMB 330/kW/yr) validates the economic viability of independent storage assets. This de-risks investments and encourages further deployment. We have revised our 2025 China storage installation forecast up by 35% to >150GWh, and expect >60% growth in 2026 to ~250GWh.

Investment Implication: Overweight on large-scale storage integrators (Sungrow, Hyperstrong) and battery leaders (CATL, EVE Energy).

2. Lithium Batteries & Materials: Cyclical Recovery

The lithium sector is showing clear signs of bottoming out and reversing.

• Price Trends: Lithium carbonate prices have risen from ~RMB 100,000/ton to over RMB 118,000/ton in recent weeks. This is driven by:
  1. Tighter supply due to maintenance cuts by major LFP producers (e.g., Longpan Technology reducing output by 5,000 tons in Jan).
  2. Stronger-than-expected demand from both EVs and Energy Storage.
  3. Restocking ahead of the Chinese New Year.
• Profitability Repair: As raw material prices stabilize and rise, mid-stream material processors can pass through costs. We expect Q4 2025 earnings to show significant sequential improvement.
  • LiPF6: Prices are firming; long-term contracts expected at ~RMB 150,000/ton.
  • Separators: Prices expected to rise by ~10% due to tight supply of high-quality wet-process separators.
  • Anodes/Cathodes: Processing fees are recovering.
• Solid-State Batteries (SSB): The technology is moving from lab to pilot. BYD and others have demonstrated 350-400 Wh/kg cells. The bottleneck is now manufacturing process optimization. We expect 2026 to be the year of pilot line scaling. This creates opportunities for specialized equipment makers and material suppliers (sulfide electrolytes).

Investment Implication: Buy leaders with cost advantages and resource integration (Tinci, Hunan Yuneng, Shangtai, Ganfeng, Zhongkuang).

3. Humanoid Robots: Early Stage Explosion

The humanoid robot industry is at a critical juncture, comparable to the EV industry in 2014.

• Catalysts:
  • Tesla Optimus: Gen3 launch in Q1 2026. Targeting 1 million units/year by 2030.
  • Domestic Players: Unitree, Fourier Intelligence, and startups like Qiyuan are launching commercial products. OpenAI’s entry signals tech giant validation.
• Value Chain:
  • Actuators: High value-add. Recommended: Sanhua Intelligent Controls, Tuopu Group.
  • Reducers: Harmonic reducers are critical for joints. Recommended: Leaderdrive, Green Harmonic.
  • Screws: Planetary roller screws are high-barrier components. Recommended: Beite Technology, Zhejiang Rongtai.
  • Sensors: Force/torque sensors and vision systems. Recommended: Leisai Intelligent, Weichuang Electric.
• Valuation: Current valuations reflect only a fraction of the long-term potential. As mass production begins, companies with confirmed orders and technical superiority will re-rate significantly.

Investment Implication: Aggressively overweight on the Tesla supply chain and core component leaders.

4. Photovoltaics: Supply-Side Reform

The PV industry is undergoing a painful but necessary consolidation.

• Price Action: Leading wafer manufacturers have successfully raised prices by ~12%. This indicates a shift from "market share at all costs" to "profitability preservation."
• Challenges:
  • Demand: Q1 2026 is traditionally weak. Domestic installations are slowing as annual targets are met.
  • Inventory: High inventory levels at the module level persist.
  • Trade Barriers: US and European trade policies continue to create uncertainty for exports.
• Opportunities:
  • Inverters: Less affected by module price wars; benefit from global storage growth.
  • Top Tier Integrated Firms: Companies with strong balance sheets and technological edges (BC, HJT) will survive the shakeout and gain market share.
  • Space PV: Emerging theme with long-term potential (e.g., Junda Shares investing in Shangyi).

Investment Implication: Selective buying. Favor inverters (Sungrow, Ginlong) and top-tier module makers with differentiated tech (Longi, Jinko). Avoid smaller, highly leveraged players.

5. Wind Power & Grid: Stable Dividends and Growth

• Wind: Offshore wind is entering a high-growth cycle in Europe and China. Domestic offshore wind tenders are accelerating. Onshore wind margins are improving as turbine prices stabilize.
• Grid: State Grid investment is counter-cyclical and robust. Focus on:
  • UHV (Ultra-High Voltage): Essential for transmitting renewable energy from west to east.
  • Overseas Transformers: High demand in Europe and US due to grid aging and renewable integration. Chinese manufacturers are gaining share.
  • Digital Grid: Secondary equipment and smart meters.

Investment Implication: Buy offshore wind cable/tower makers (Orient Cable, Dajin Heavy Industry) and grid equipment leaders (Pinggao, Xuji, Siyuan Electric).

Risks / Headwinds

1. Investment Slowdown: A significant reduction in State Grid or renewable energy investment would directly impact order books for equipment manufacturers.
2. Policy Uncertainty: Changes in EV subsidies, solar tariffs, or energy storage compensation rules could alter project economics negatively.
3. Price Competition: If the "anti-involution" consensus in PV breaks down, price wars could resume, eroding margins. Similarly, unexpected capacity expansions in lithium could suppress prices.
4. Geopolitical Tensions: Trade barriers (tariffs, entity lists) in the US and Europe could hinder the export growth of Chinese EV, battery, and solar companies.
5. Technological Disruption: Faster-than-expected adoption of alternative technologies (e.g., solid-state batteries displacing liquid electrolyte, or new PV cell architectures) could render existing capacity obsolete.

Rating / Sector Outlook

Overall Rating: Overweight (Maintained)

We believe the Power Equipment sector is poised for a strong 2026, driven by the convergence of three major trends:
1. Energy Storage Boom: Global demand is accelerating, supported by policy and AI-driven power needs.
2. Lithium Cycle Turn: Prices and profits are bottoming out, offering attractive entry points for quality stocks.
3. Robotics Emergence: A new, high-growth asset class is becoming investable.

While Photovoltaics face near-term headwinds, the supply-side discipline is a positive structural change. Wind and Grid sectors provide stable growth and dividend yield.

Strategic Allocation:
* Core Holdings: CATL, Sungrow, BYD,汇川技术 (Inovance).
* High Growth/Satellite: Sanhua Intelligent Controls, Tinci Materials, Orient Cable, Pinggao Electric.
* Thematic Bets: Humanoid robot supply chain (Sanhua, Tuopu, Beite), Solid-state battery materials.

Investment View

Top Picks & Rationale

1. Contemporary Amperex Technology Co. Limited (CATL) [300750.SZ]

• Logic: Undisputed global leader in both EV and Energy Storage batteries. Benefiting from the storage boom and stabilizing lithium costs. Strong cash flow and R&D capabilities keep it ahead in solid-state and other next-gen technologies.
• Valuation: Trading at ~27x 2025E P/E, which is reasonable given its dominant market position and consistent growth.

2. Sungrow Power Supply [300274.SZ]

• Logic: Global inverter leader with a rapidly growing energy storage integration business. Well-positioned to benefit from US and European storage demand. Expanding into AI Data Center power solutions (AIDC).
• Valuation: Attractive at ~25x 2025E P/E.

3. Sanhua Intelligent Controls [002050.SZ]

• Logic: Dual engine growth: Traditional thermal management for EVs/HVAC is stable, while the humanoid robot actuator business offers massive optionality. As a key Tesla supplier, it is a primary beneficiary of the robot mass production cycle.
• Valuation: Higher multiple (~58x) reflects the high growth potential of the robotics segment.

4. Tinci Materials [002709.SZ]

• Logic: Leading electrolyte and LiPF6 producer. Highly elastic to lithium price increases and margin recovery. As battery production ramps up, demand for electrolytes will surge.
• Valuation: Currently trading at ~61x 2025E P/E, reflecting the expected earnings rebound from a low base in 2024.

5. Pinggao Electric [600312.SH]

• Logic: Leader in UHV switchgear. Beneficiary of increased State Grid investment and overseas grid modernization. Low valuation (~15x P/E) and high dividend yield make it a defensive yet growth-oriented pick.

Other Notable Mentions

• EVE Energy [300014.SZ]: Strong growth in cylindrical batteries and storage.
• BYD [002594.SZ]: Vertical integration leader; strong brand power in premium EV segment.
• Orient Cable [603606.SH]: High barrier-to-entry offshore wind cable supplier.
• Inovance Technology [300124.SZ]: Industrial automation leader; benefiting from manufacturing recovery and robotics expansion.
• Ganfeng Lithium [002460.SZ] / Zhongkuang Resources [002738.SZ]: Upstream resource plays with elasticity to lithium price recovery.

Conclusion

The Power Equipment sector is transitioning from a phase of pure capacity expansion to one of technological innovation and profitable growth. Investors should focus on companies with global competitiveness, technological moats, and exposure to high-growth sub-sectors like energy storage and robotics. The current market correction provides an attractive entry point for long-term investors.

Appendix: Detailed Data Tables

Table 1: Company Valuations (Selected)

(Data as of December 31, 2025)

Table 2: Key Lithium Material Prices (Week Ending Dec 31, 2025)

Table 3: PV Supply Chain Prices (Week Ending Dec 31, 2025)

Table 4: Recent Corporate Announcements

Disclaimer: This report is for institutional investors only. It does not constitute investment advice. Market risks exist; please invest cautiously. The views expressed are those of the analysts at Dongwu Securities Research Institute as of the date of publication.